The impact of company culture on IBP part II: Change

Implementing Integrated Business Planning (IBP) processes may challenge many existing values and behaviours in a company. For IBP to be effective a set of values is required. Some important ones are:

1. Group thinking: take a holistic business view rather then functional or silo view. 2. Feedback: the ability to provide and receive open and honest feedback on IBP effectiveness. 3. Collaboration: open and honest in sharing information and knowledge between functions. 4. Empowerment: believe and trust in each others capabilities, decisions and numbers.

The common denominator in all these values is trust. Furthermore it’s fair to say that these are values that need constructive behaviours, which will not be embedded in every company’s culture. This means that many companies that go through an IBP implementation require change in their business values and behaviours. And change isn’t easy!

In the 2010 second edition of the McKinsey quarterly, an article about change management revealed that according to a 2008 McKinsey study of 3,199 executives around the world, only 30% of change transformations are successful. The article mentioned that the groundbreaking 1996 change study – Leading Change – from John Kotter, found the same success rate for change programs. This means the success rate of change programs has not improved in the last 15 years.

In my 2010 survey on Supply & Operations Planning (S&OP); S&OP pulse check 2010, survey participants nominated senior leadership support and organizational silos as the biggest roadblocks to implementing S&OP: • A lack of internal collaboration between the organizational silos is seen as a major roadblock by 48% of participants. • 68% of survey participants’ believe that senior leaders don’t show the behavioural support required for the IBP change.

Now we know how hard change is in general and what the biggest roadblocks for IBP change are, it brings us to the next questions. How to detect in what change environment you operate and if how to know if you have any chance of implementing IBP successfully?

The first thing to know to understand your change environment is that there are three levels on which people resist change.1

1. Level1: I don’t get it: this involves facts, figures and ideas. It’s the world of thinking and rational action. It is the world of presentations, diagrams, processes and logical arguments. 2. Level 2: I don’t like it: this is an emotional reaction to the change. It is based on fear. People are afraid that this change will cause them to lose face, status, control, maybe even their jobs. 3. Level 3: I don’t like you: maybe they do like you, but they don’t trust or have confidence in your leadership.

These levels of resistance can be present in every echelon in the organization. Yes indeed, don’t expect every senior leader or stakeholder to get IBP, to like IBP, or to like you!

Secondly, before you start an IBP project, use the next four steps to discover in what change environment you are about to operate in:

1. Have informal chats with other IBP stakeholders on the track record of change programs in the company and how they view this IBP change. Does the company handle change well? 2. Check how many strategic projects are on the list in the board room. There should be a maximum of 5. If IBP is not part of that, or if there are 30 strategic projects, expect priority issues. 3. Have an informal chat with senior leaders if they ‘get’ and ‘like’ IBP. This will tell you if they are committed to support it. You might pick up level 3 resistance too. 4. Assess the company culture. Is it a demand and control environment, where people are micromanaged, feedback is seen as a personal attack and trust is low? Or is it an empowered, trustful environment, where feedback is seen as a ‘gift’ to improve people and process?

It can help to write a short web based questionnaire to IBP stakeholders. You can use free software like Kwiksurvey.com. Five questions can be enough to give you great insight in your change environment and it will take only 5 minutes for participants to complete.

Thirdly, based on the four steps, assess the change environment. If you’re in an organization that has a good record in change, that’s great for your project. If the company doesn’t have a great track record in change, that’s ok. Not all organizations can be great in change if 70% of change programs still fail! Too many strategic projects will give priority problems and will slow you down, but can be dealt with. Level 1 resistance is hard work, but can be overcome by education.

Change gets harder when you discover level 2 or level 3 resistance. And it gets even harder if the company culture is one of demand and control. In these situations, it’s valid to say; get help. Help in communication, project planning, stakeholder analysis, stakeholder management, education, the whole lot. Human Performance or People and Culture departments should be involved here. It can’t be only up to IBP to make the change in culture.

If all the moons align in a negative way and the company has a terrible change record, your project is one of thirty in the board room, you noticed level 3 resistance and the environment you observe is a low trust demand and control environment, there is only one advice: forget IBP and run for your life!